Video | Model Portfolio Update : +10.8% vs SPX +3.9%

Since its inception on April 24th, the Model Portfolio has achieved a strong start, outperforming by 6.5 percentage points over SPX. Here is a brief rundown of the top contributors.

Video | Model Portfolio Update : +10.8% vs SPX +3.9%

This time I've recorded a video update on the positions we have on in the Widmark Research Model Portfolio. The portfolio has gotten off to a good start since inception on April 24th, now up 10.8% at yesterday close, compared to the S&P at 3.9%. That’s 6.9 ppt outperformance.

Again I want to make it clear that this is the equal weighted performance of our open calls. And we always use the End of Day prices after we've published when calculating performance. We don't use intraday prices, so it’s definitely possible to replicate this portfolio. 

As you all know, the re-acceleration in inflation expectations and rates have pushed us markets down. I think the move in Dow Jones has been especially remarkable compared to S&P and Nasdag when you look at it year to date. 

And I dare to say that this is expected since half of the open positions in the Model portfolio, 4 out of 8, are shorts for that very reason.  

Ok, let's just go through the positions.

We got Airbnb, doing well so far, down 10% but I feel like the sentiment towards travel is shifting. RyanAir CEO said the other day that: “Travel demand across Europe for summer '24 is strong. We still see peak travel demand certainly through July and August being strong."

So not super comfortable being short ABNB, but still expect more structural problems for the company. There's actually been some positive comments around the company's effort to reinvent themselves. So my thinking now is that if it goes above $150 will close it.

Same goes for short in Roblox, down 8% on since inclusion, on the weak report, but if it goes above $34 and tries to close the gap, we close it.

United Parks and Resorts, former Seaworld, operator that looks like they could be in trouble, but also benefit from the strong summer demand. However I do like the price action, with a potential Head and Shoulders forming here. So we stay in this one, but with a close eye at price above $53.

As for Reddit I am a bit torn, it’s up 25% since entering in the portfolio. I do want to be long term in this one. I think the this second wave meme stock frenzy we’ve had with Roaring Kitty resurfacing will have an inpact on Q2 numbers. So I’m going to try to stay in this one. 

In Bitcoin I am a bit disappointed by the weak price action, but here we are long term, but it's very difficult to trade short term. If it goes below 60k we’re mot likely testing 52k also. Main thesis is that 67k holds and we go for another high.

We are short Digital Ocean. The stock did well on earnings, so we need to keep a close eye on this one. Our scenario will need some time to play out here, but if it goes above $40 we close for a loss, would be around 12%. 

Next up is another star performer in terms of bets, Cocoa up 20%. Will probably see some sort of pullback soon, but we’re looking to go for another ATH. We set stop at May lows here.

Lastly we got Scorpio Tankers that we published a piece on yesterday. We’ve already seen a tremendous rally from the 2020 lows, going from 8 to 80 dollars, so looks kind of nuts to go long here, but they’ve done a fantastic job deleveraging the company, so cash breakeven is now down to $12.500 compared to rates at $40,000, meaning that theyre on track to generate over $1 bn i CF this year, meaning that its trading at 5x CF. Technically it doesn’t look great however. Timing is tricky. We’re only in with half a position and take our chances that we will get filled on the other half at $73. If not, then we won’t.

Early next week, I’m recording a video interview with a fantastic geopolitical expert about the current geopolitical themes and their implications for the markets, most notably the upcoming OPEC+ meeting. So keep an eye out for that one.

That’s it for today. Take care!